COB 6.2 Provision of key features

COB 6.2 applies to a firm in accordance with COB 6.1.1 R.

The key features or information which the rules in COB 6.2, COB 6.2 and COB 6.4 require a firm to provide to a private customer in relation to a packaged product, cash deposit ISA or cash deposit CTF must be provided by the firm in a durable medium.356

When a firm sells, personally recommends or arranges the sale of a life policy to a private customer, the private customer must be provided with appropriate key features before the private customer completes an application for the policy, subject to COB 6.2.9 R (Sales through intermediaries) and COB 6.4.27 R to COB 6.4.31 R5 (telephone sales3 and other exemptions).5

COB 6.2.7 R does not apply to a product provider when its life policy is sold on the personal recommendation of, or arranged to be sold by, another person, provided that other person:3

1. (1)

   is a firm (or appointed representative) operating from an establishment maintained by the firm (or appointed representative) in the United Kingdom; or3

2. (2)

   is operating from an establishment in an EEA State whose law imposes an obligation on the person to provide information about the life policy in accordance with articles 3 and 5(1) and (2) of the Distance Marketing Directive.37

1. (1)

   Where key features have already been provided by a firm to a private customer in accordance with COB 6.2.7 and the terms for the proposed life policy are subsequently altered before the private customer completes an application form, the firm must ensure that the private customer is provided with revised key features, unless the alteration is one or more of the following:3

   1. (a)

      the amount of the premium is changed;3

   2. (b)

      the amount of any commission or remuneration payable is reduced;3

   3. (c)

      a rider benefit is added, removed or amended.3

2. (2)

   If (1)(a) to (c) apply, then, subject to COB 6.4.27 to COB 6.4.31 (telephone sales and other exemptions), if the contract is to be a distance contract with a retail customer, the retail customer must be provided with details of such changes in a durable medium in good time before the contract is concluded.35

Where key features have already been provided to a private customer by a firm, and the terms of the proposed life policy are materially altered after the private customer completes an application form, the private customer must be provided with details of the change in a durable medium as soon as practicable and offered revised key features.3

When a policyholder applies to vary a life policy issued on or after 1 January 1995 (or is recommended to do so) and the variation of the policy gives rise to a right to cancel under COB 6.7.7 R, the policy holder must be provided with:3

1. (1)

   the information required by COB 6.5.15 R to COB 6.5.19 R, COB 6.5.23 R to COB 6.5.25 R, COB 6.5.27 R to COB 6.5.28 R and COB 6.5.38 R; and3

2. (2)

   in the case of a variation which results in a new distance contract, all the contractual terms and conditions and the information in COB App 1;3

in a durable medium by the firm personally recommending, arranging or effecting the variation in good time before it is put into effect, unless COB 6.2.19 R (sales through intermediaries) or COB 6.4.27 R to COB 6.4.31 R (telephone sales and other exemptions) applies.35

1. (1)

   4When a long-term care insurance contract which is

   1. (a)

      not a pure protection contract and which was issued on or after 1 January 1995; or

   2. (b)

      a pure protection contract and which was issued on or after 31 October 2004;

   is varied so as to bring into effect provisions for long-term care benefits, the firm must provide the private customer with appropriate key features in good time sufficient to enable the private customer to consider them before the variation takes effect.

2. (2)

   If the circumstances of the variation, whether by the exercise of an option or otherwise, make it impossible to provide the key features before the variation takes effect, the firm must do so as soon as possible afterwards.

1. (1)

   4When a policyholder applies to vary:4

   1. (a)

      a life policy issued before 1 January 1995; or4

   2. (b)

      a pure protection contract issued before 31 October 2004 and which would after 30 October 2004 be a long-term care insurance contract;4

   (or is personally recommended to do so) and the variation of the policy gives rise to a right to cancel under COB 6.7.7 R, information must be given to the policyholder by the firm that is personally recommending, arranging or effecting the variation before it is put into effect, unless COB 6.2.19 R or COB 6.4.27 R to COB 6.4.31 R (telephone sales and other exemptions) applies.

2. (2)

   When giving the information in (1), the firm must:35

   1. (a)

      believe on reasonable grounds that the information given is sufficient to enable the policyholder to understand the consequences of the variation; and3

   2. (b)

      in the case of a variation which results in a new distance contract, in good time before the variation is put into effect, provide all the contractual terms and conditions and the information in COB App 1.3

COB 6.2.16 R and COB 6.2.18 R do not apply to a product provider when the variation to its life policy is effected on the personal recommendation of or arranged by another person, provided that other person:3

1. (1)

   is a firm (or appointed representative) operating from an establishment maintained by the firm (or appointed representative) in the United Kingdom; or3

2. (2)

   is operating from an establishment in an EEA State whose law imposes an obligation on the person to provide information about the variation to the life policy in accordance with articles 3 and 5(1) and (2) of the Distance Marketing Directive.37

There is no requirement for key features to be provided for a new life policy or a variation to an existing policy if, at the time that the private customer signs the application, he is habitually resident:3

1. (1)

   (except for distance contracts with retail customers) in an EEA State other than the United Kingdom; or3

2. (2)

   outside the EEA and he is not present in the United Kingdom.13

COB 6.2.7 does not apply to a CTF provider in relation to a variation to an existing policy held within a CTF, if:

1. (1)

   the terms and conditions, including all charges, are the same as applied at the time of the purchase, or the most recent purchase or payment, of the existing policy; and

2. (2)

   key features outlining those terms and conditions were issued to the customer in respect of that previous purchase.6

When a firm sells, personally recommends or arranges for the sale of a scheme to a private customer, unless COB 6.2.24 R (exceptions) or COB 6.4.27 to COB 6.4.31 R (telephone sales and other exemptions) applies, the private customer must be provided with key features for the scheme before the private customer completes an application for the scheme holding.35

A firm need not provide key features to a private customer in respect of a scheme if:

1. (1)

   the firm is a product provider and the scheme holding is sold on the personal recommendation of, or arranged to be sold by another person, provided that other person:3

   1. (a)

      is a firm (or appointed representative) operating from an establishment maintained by the firm (or appointed representative) in the United Kingdom; or3

   2. (b)

      is operating from an establishment in an EEA State whose law imposes obligations on the person to provide information about the scheme holding in accordance with articles 3 and 5(1) and (2) of the Distance Marketing Directive; or3

2. (2)

   at the time he signs the application, the private customer is habitually resident outside the EEA and is not present in the United Kingdom; or

3. (3)

   (except for distance contracts with retail customers) the scheme holding is purchased by a private customer on an execution-only basis; or3

4. (4)

   the scheme holding is purchased on behalf of a private customer by an investment manager exercising discretion; or

5. (5)

   the sale of the scheme holding is arranged or recommended by an investment manager who is not exercising discretion and the private customer has agreed, either in relation to that specific holding or generally, that key features need not be provided; or

6. (6)

   a private customer is making a purchase of a scheme holding (whether or not held within a CTF) in a fund in which he already has a scheme holding and has already been provided with appropriate key features covering the purchase; or36

7. (7)

   a private customer is transferring from accumulation units to income units of the same scheme (or vice versa) and has already been supplied with key features which cover the transfer; or3

8. (8)

   the scheme is a UCITS scheme recognised under section 264 of the Act (Schemes constituted in other EEA States); however, if the sale is by way of a distance contract, the firm must provide all the contractual terms and conditions and the information in COB App 1 instead of key features.238

3[Deleted]

3[Deleted]27

1. (1)

   2When a firm sells, personally recommends or arranges for the sale of a UCITS scheme which is a recognised scheme under section 264 of the Act (Schemes constituted in other EEA States) to a client, it must offer the client free of charge a copy of the scheme's most recent simplified prospectus before an application for the scheme holding is completed.

2. (2)

   The simplified prospectus must meet the requirements of the UCITS Directive necessary for the scheme to enjoy the rights conferred by the Directive.

3. (3)

   When the scheme holding is purchased on behalf of a client by an investment manager exercising discretion, the requirement in (1) will be satisfied by the investment manager being offered the simplified prospectus free of charge before the application form for a scheme holding is completed.

4. (4)

   A firm must not carry on any of the activities referred to in (1) in relation to a UCITS scheme which is a recognised scheme under section 264 of the Act unless it is satisfied on reasonable grounds that:

   1. (a)

      a copy of the scheme's simplified prospectus has been filed with the FSA before any units in the scheme are marketed in the UK; and

   2. (b)

      the information contained in the simplified prospectus is up to date and is not in need of revision;

   and that any subsequent amendments thereto have been filed with the FSA.